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You Might Sell Your Home… And Not Even Know It

Well, it’s happening again. Scammers are coming after innocent homeowners, assuming their identities, and selling their homes on their behalf. It’s disgusting behaviour that’s made even more possible by a precarious housing market. Unfortunately, this isn’t anything new. Scams like this have been happening for decades. The only thing that’s changed is how the fraudsters do it.

In most recent cases, homes were sold by tenants who used fake IDs and job letters to rent the houses. Once they’re in, they assume the identity of the homeowner, take out a mortgage in their name, and use a realtor to list the home.

Nothing a little due diligence couldn’t catch off the bat. If you’re renting a property you own, make sure you do your homework. It could save you a lot of money and headache. Call their employers and ask for personal references. Look them up on Google. Do a little social media search. Ask for bank statements. And most importantly, make sure you get a valid Equifax credit report.

Taking these steps can end this cycle that’s been happening for years. To show you how long scams like this have been around for, here’s an article I wrote years ago. Small details may have changed – but the story is the same at its core.

Since 2006 when I last wrote about this, we have seen some provincial governments step in with laws to help protect unsuspecting homeowners.  You can also purchase title insurance or an alternative method of protection.

A couple of years ago, Toronto police said a woman used a fake ID to get a $300,000 mortgage.  The unsuspecting homeowner only discovered a mortgage had been fraudulently registered on their home when they received mortgage documents in the mail.

This is not a new scam. It’s happened many times in the past. Here’s a big one from 2010 that involved $140 million and hundreds of people. This one was huge. Most are not this big or elaborate.  It’s the smaller ones, like the recent one for $300,000, that are more commonplace.

How It’s Done

At the risk of advocating or promoting fraud, I’ll just share the fine points. A title search is done on a house, usually in mature neighbourhoods where the elderly live and it’s more likely a mortgage will have been paid off. Title searches are cheap and all of that info is public knowledge.

The crooks will then present false ID to a banker or broker and request a mortgage. They will usually get a small mortgage in relation to the value of the house.  Using fake income docs, they will proceed to get the mortgage approved and advanced through a lawyer. The lawyer will verify the ID (if it’s fake, it’s hard to determine) and close the transaction.  The crook walks away with the money. The real homeowner gets a letter requesting their monthly payments from the lender, and now the fun begins.

The unsuspecting homeowner has to go through quite a process to prove their innocence and then has to spend quite a large amount of money on legal fees to get the mortgage removed.  It’s quite a headache. A headache that can be avoided easily.

How To Avoid Mortgage Fraud

It’s easy.  Just register a mortgage on your house. I don’t mean borrow money just for the sake of preventing mortgage fraud.  You can take out a secured line of credit that will be secured by a collateral mortgage charge registered to your home. If you don’t use the line of credit, you pay no interest.  The crooks will see that you have a mortgage charge registered and will most likely leave you alone and go on to the next victim.

To understand more and to find out what your best options are, contact an experienced mortgage broker for advice and consultation. A good broker is always happy to help and offer advice.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca

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